WM Motor fundraise will test its anti-Tesla appeal

Beijing International Automotive Exhibition, or Auto China show
Weltmeister's EV concept Maven by WM Motor is displayed at the Beijing International Automotive Exhibition, or Auto China show, in Beijing, China September 27, 2020. REUTERS/Tingshu Wang

HONG KONG, June 1 (Reuters Breakingviews) - China’s anti-Tesla may struggle to make up for lost time. WM Motor missed a chance to go public when valuations were high, stalling founder Freeman Shen’s dreams of mass-producing affordable battery-powered cars. Now the company is planning an initial public offering in Hong Kong. A listing will test the enduring appeal of its hoped-for economies of scale.

Shen’s team of experienced executives from the auto industry helps the upstart to stand out. So does its strategy: unlike Chinese peers Nio and Tesla (TSLA.O), which started with premium models to establish a brand before offering more accessible price-points, WM sold cheaper cars from the beginning and quickly gained traction. Its first model, a sport utility vehicle starting at 160,000 yuan, nearly $24,000 at current exchange rates, became a best-seller in its price segment after its launch in 2018. The company attracted early backing from big technology names including Tencent (0700.HK) and Baidu (9888.HK).

But now the timing feels off. A market mania for electric cars – especially Chinese ones – peaked more than a year ago after New York-listed Nio clocked an astonishing quadruple-digit increase in its valuation, prompting rivals to fill their coffers. Xpeng (9868.HK) and Li Auto (2015.HK) both went public in 2020, while Nio repeatedly tapped the markets. Now, Nio’s shares are worth less than one-third of what they were at their peak in February 2021.

Investors could hesitate for other reasons, too. While Wednesday’s filing show its top line nearly doubled in 2021 from a year earlier to 4.7 billion yuan, growing faster than its net loss, a slowdown in China, where Covid curbs are battering both auto sales and their supply chains, plus the soaring cost of raw materials, mean Shen may face an overall longer drive to profitability read more . A further concern is that WM’s largest customer accounted for nearly a fifth of revenue last year: a cornerstone client can help a fledging auto brand, but it poses a concentration risk too.

Still, Shen doesn’t have much to lose from trying his luck now.

(The author is a Reuters Breakingviews columnist. The opinions expressed are her own. Refiles to add slug.)

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Chinese electric-car maker WM Motor on June 1 filed for an initial public offering in Hong Kong. The document does not reveal the size of the deal.

The company reported a net loss of 8.2 billion yuan ($1.2 billion) for the year 2021, compared with a loss of 5.1 billion yuan a year earlier. It reported sales of 4.7 billion yuan for the same period, compared with 2.7 billion yuan in 2020.

Editing by Una Galani and Thomas Shum

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Katrina Hamlin is global production editor, based in Hong Kong. She is also a columnist, writing on topics including environmental policy, cleantech and green finance, as well as the gambling industry in Macau and Asia. Before joining Reuters in 2012, Katrina was deputy managing editor of Shanghai Business Review magazine. She graduated from the University of Oxford with an MA in Classics, and earned a Masters of Journalism with distinction from the University of Hong Kong.